NEW RENEWABLES STRATEGY

TARGET FOR THE NEW RENEWABLE ENERGIES

The government is strongly engaged with renewable energies and with the goal of keeping the renewable energies as a support of the electric system of Angola, in specific through a strong investment in the hydroelectric potential of the country. The Development Plan for the Energy and Water Sector for the period of 2013-2017 foresees the installation of 5,000 MW mainly of hydroelectric energy.This investment not only enhances the competitiveness of the system but also represents the commitment with future generations.

The main goal of the present strategy is to diversify the investment in renewable energies through a growing role of the new renewable energies, including small hydropower plants. It is expected that by 2025 energy consumption may reach 39 TWh meaning that it is necessary to go further than 9 GW of installed energy capacity to meet the hydrological variability and also to guarantee the safety of energy supply.

Upon the necessity of reinforcing the installed energy capacity by 2025 and the Government commitment with the introduction of the new renewable energies, the Government of Angola establishes to 2025 that the energy generated by new renewables exceed 7.5% of the energy produced, about 3
TWh, being expected for that the installation of 800 MW.

STRATEGIC GOALS FOR THE NEW RENEWABLE ENERGIES

Three strategic goals are set forth for the new renewable energies in order to meet the main challenges identified:

1. Improving the access to energy services in rural areas basedL on renewable sources: The goal for off-grid situation is to ease the accomplishment of several activities that support the rural development and that relieve them from poverty, as well as to guarantee that communities living in non-electrified areas may access to safer and better quality energy sources.

2. Develop the use of the new renewable technologies connected to the grid, enhancing the establishment of new markets and reduction of regional asymmetries: The goal for grid-connected renewable energies is to develop the national renewable resources for generating electric energy, taking advantage of opportunities for replacing fossil fuels, avoiding investments in grids or enhancing new sectors that will generate wealth and employment.

3. Promote and accelerate the private and public investment in the new renewable energies: The goal is to generate effective conditions of investment in the new renewable energies that mitigate the distortion introduced by the subsidies to the fossil fuels, offering a suitable payback to the investment, an appropriate mitigation of risks and a regulation, procedures and communication that ease the implementation and commit investors.

SPECIFIC GOALS OF RENEWABLE ENERGIES STRATEGY BY 2025

STRATEGIC GOAL 1: Improve the access to energy services in rural areas based on renewable energies

Framework and specific goals
Energy is a development factor not only in urban areas but also in rural areas. Rural areas are defined by a low population density, high dispersion of population and low energy consumption.
The rural areas far from the grid may be divided in two areas: rural areas of influence – commune headquarters and others – and dispersed rural areas.

In the rural areas of influence, it is possible to guarantee the supply of electric energy through small local grids or systems of renewable energies, mainly solar and pico/micro hydro plants, associated with public or commune infra-structures. It is possible to foresee solutions of incentive to the installation
of “Individual Solar Systems” (thermal or photovoltaic) or to the establishment of energy stores through private initiative.
The incentives to private initiative and the financing solutions are fundamental as the investments to be made are heavy and, most times, not much attractive in comparison with the alternative of diesel or gasoline generator with a subsidized price that represents a cost for the country.

In disperse rural areas the systems or single solutions based on solar energy are the most suitable solution for providing basic services of energy. The use of wood or charcoal will remain as the most used solution for cooking, giving priority to the spread of efficient or improved ovens. The higher dispersion and lower economic capacity may justify a higher level of subsidy associated with simpler energy services and of lower investment. The productive use of renewable energies in agricultural communities regarding water pumping, drying and milling may be defined as an area of high priority in these areas.

An integrated management of several interventions regarding rural electrification is important to optimize the allocation of resources and guarantee the quality, coherence and regional balance of on-going initiatives. Quality is one of the important issues because often the low purchasing power compels consumers to opt for solutions of low quality and with reduced duration, which will result in increased spending and a throwback to traditional solutions.

The specific goals, by 2025, in the area of energy services for offgrid rural areas are:

• Establishment of the National Institute for Rural Electrification;

• Broadening the program of “solar village” to every commune headquarters and populations with more than 2,000 inhabitants that are not connected to the national grid by 2025, with the target of connecting at least 500 sites, implementing more than 10 MW of solar photovoltaic energy and installing 50 systems based on pico and micro-hydro;

• Promote the private domestic market of at least 1 MW per year of individual solar systems produced in Angola;

• Distribute at least 100,000 improved stoves and 500,000 solar flashlights, to the most remote populations and with low purchasing power, and create distribution and training teams within the scope of the National Institute for Rural Electrification;

• Implement in more than 200 agricultural communities, systems for productive uses (irrigation, drying and milling) based on renewable energies;

• Promote the establishment of at least 200 new companies or businesses dedicated to manufacturing, maintenance and distribution or commercialization of renewable energetic solutions for rural areas.

To reach the goals the following measures were identified. This measures should be aligned with the economic development programs defined by the Government.

Measures within the scope of the communitarian and public services
• Establishment of the National Institute for the Rural Electrification (NIRE) which will be responsible for managing the National Fund for Electricity and, in the most rural areas, for managing every initiatives of the Ministry of Energy and Water, guaranteeing the engagement with Provincial Governments and drive the allocation of concessions for distribution or production/distribution to private parties for extending the grid or for the establishment of new local grids;

• Establishing parameters to define when the energy services will beneficiate from a local grid, individual system or service, as well as communitarian or public energy services which may be available in each type of site. Based on those parameters a new map of the national territory will be developed that identifies the proposed areas for electrification by grid extension, by means of isolated systems, local grids or individual services by 2025, as well as the level of “energy” services on a public and communitarian level in each site;

• Launch public tenders, in articulation with the Provincial Governments, for the installation of local grids (known as “solar or renewable villages”) based on systems of solar photovoltaic energy in the rural commune headquarters and populations with more than 2,000 inhabitants, with no access to the grid until 2025, benefiting social infra-structures, namely: public illumination, water pumping, health centers, schools, administrative buildings, police stations
and communitarian centers;

• Promote the development of communitarian local grids also based on pico and micro-hydro (“renewable villages”), through mapping, identification and research on sites with potential on the territory, and through the launch of tenders for its deployment;

• Over-sizing “solar or renewable villages” in order to establish a concession of energy services in each site conceded to the private sector that carries out individual services to communities and that guarantees a maintenance of both communitarian and local individual systems;

• In addition to “solar or renewable villages”, promote the installation of solar thermal systems in community buildings and, in more dispersed and less populous areas, to promote the installation of streetlights from photovoltaic systems.

Measures within the scope of domestic use:
Promote the installation of photovoltaic systems of illumination on houses located in off-grid areas and where there are no more economically favorable alternative through, among others:

• Programs and campaigns of divulgation and training;

• Credit lines with low-interest (subsidized) to be established through banks;

• Tax benefits to equipment manufactured in national territory and to commercial solutions of renting or payment per use.

Ease the access to solar photovoltaic energy systems, in particular in disperse areas, with low consumption and low purchasing power, through a program of incentives to the establishment of distribution and retail networks of these equipment.
Establishment of a system for certifying equipment traded in the area of renewable energies for rural electrification in order to guarantee the regularly specified quality standards.
Promote the construction of small bio digesters for individual use, in the agricultural areas, through an incentive and training program to be developed in coordination with the Ministry of Agriculture.
Promote, in articulation with the Provincial Governments, the distribution of efficient or improved stoves and solar flashlights, manufactured in Angola and also the training for final users.

Measures in the area of productive activities and stimulus to entrepreneurial initiative:
Promote close to agricultural communities, in articulation with the Ministry of Agriculture, a program of incentive to the productive use of renewable energies for agriculture, including the incentive to installation of:

Launch a program of training, accreditation and distribution of raw materials for the manufacturing by local artisans of low cost solar dryers for food.
Support and ease the establishment of small private local grids based on renewable energies, energy stores and companies of installation and technical assistance in the area of the new renewable energies, through a program of training, incentives and a simplified licensing regime.
Enhance the establishment of factories for equipment oriented to the off-grid rural electrification associated with “solar or renewable villages”, with the individual solar systems, with the improved stoves and solar flashlights, as well as with the productive uses in order to to provide knowledge, employment and decrease the cost of these solutions.

STRATEGIC GOAL 2: Develop the use of new renewable technologies connected to the grid, enhancing the establishment of new markets and reduction of the regional asymmetries

Framework and specific goals
It is important to develop with logical reasoning the grid connection of each of the priority new renewable energies: solar energy, small hydropower plants up to 10 MW, biomass energy and wind energy.

Regarding solar energy, there were identified several opportunities for connecting to the grid, in particular in the South System and Eastern System that is important to carry out together with the establishment of at least one modern factory that enhances a real market of solar solutions also for the rural
areas. The thermal solar, despite not producing electricity, may decrease its consumption, with particular interest in the sites where the production of electric energy is based on diesel.

Regarding hydropower, it is fundamental to implement the projects assigned, prepare the launch of tenders for the remaining identified potential and carry out a detailed mapping in order to identify additional opportunities, for the electrification of isolated urban areas and also for the small hydroelectric projects for connecting to the grid.

Regarding biomass energy, it is important to implement the opportunities identified with potential for enhancing agricultural and forestry initiatives, in particular in the North, Center and East. The cogeneration or the energy use of waste from agricultural and/or livestock activities may help enhancing
new entrepreneurial realities in the agro-livestock that is important to support through the acquisition of exceeding energy, always that its prices are suitable. Finally, it is important to establish incentives, in cooperation with the Ministry of the Environment, for the construction of 1 or 2 incineration
units based on waste fuels (up to 50 MW) and in order to the landfills be prepared for using the gas that will generate to produce energy.

Regarding wind energy, the confirmed resources in Tombwa together with the heavy investments required in terms of the grid suggest a phased project – meaning that it is possible to reach the target of 100 MW by 2025 with a first phase of 20 MW in Tombwa and several other projects across the territory. It is also important to take advantage of the first 100 MW to obtain knowledge, train people with the needed skills to maintain the equipment and create
competencies in the area of renewable energies, promoting the link to the universities and the launch of training offers in this area.

Regarding other sources of energy and investigation and development, it is important to follow technological evolution, trying to understand its consequences and application in the Angolan context.

The specific goals for grid connection of renewable energy technologies by 2025 are:

• Regarding generation based on small hydropower plants, to reach 100 MW with at least 60 MW oriented to the electrification of municipalities headquarters based on isolated systems;

• Regarding generation based on biomass, to reach 500 MW of installed capacity, supporting the establishment and development of new livestock and agriculture ranks, with a particular interest for sugarcane, of new forestry businesses in the eastern and center of the country, and of the establishment of
incineration units of waste fuels;

• Regarding wind power, to reach 100 MW of installed capacity, with a specific focus on a broader regional diversity and a taking better advantage of the current infra-structures;

• Regarding other sources of renewable energies and research and development, to establish a center of research and development for the new renewable energies in Angola.

To implement the mentioned goals the following measures were identified:

Measures in the area of solar energy
Launch tender to concede licenses for the construction of photovoltaic power plants connected to the grid, under the regime of Independent Power Producer, with a total capacity of 100 MW - 10 MW per year over 10 years - associated with the installation of a modern factory unit and of distribution networks and trade of individual systems at competitive prices for rural areas.
Study and dimensioning of solar systems to replace diesel fuel in thermal power plants of isolated system to be included in the tender to be launched.

Promote the establishment of a market for solar photovoltaic and solar thermal energy disseminating information to the general public by means of great impact, such as on television and radio. Moreover, technical, commercial, economic and legal information should be disseminated for the private sector through official websites.

Launch a pioneer program to encourage the use of solar collectors for heating water in the interior Provinces headquarters supplied with electricity generated from diesel, in order to launching a national program.

Measures in the area of small hydropower plants
Promote the study of projects and launch tenders for the construction of at least 60 MW of projects for competitive small hydroelectric power plants oriented for the electrification of municipalities’ headquarters away from the network.

Establish a system of concession of production/distribution and remuneration of isolated systems based on small hydropower plants that limit the risks and create the appropriate incentives to the optimization of projects, namely through power purchase agreement of the type that “receive or pay” and independent remuneration by type of asset. A system of certification/inspection of the energy produced and distributed to safeguard any
subsidies to be awarded will be created.

Conduct a thorough mapping of the hydroelectric potential and national projects to boost the private sector or promote new tenders.

Promote the allocation of concessions and construction of small hydroelectric power projects connected to the grid at competitive costs.

Measures in the area of biomass energy
Promote and encourage the interconnection to the National Grid and sale of energy surplus from units of electricity cogeneration, from sugarcane bagasse and agro-livestock waste, providing for the installation of at least 110 MW by 2025.

Promote the implementation of hydro-thermal phased projects in the central region and associated with the establishment of a forestry industry in the region, providing for the installation of 300 MW of biomass power plants and equivalent additional capacity of medium and large-size hydro by 2025 (power capacity greater than 10 MW).

Promote the construction of at least 2 forestry biomass power plants close to large cities in the east of the country with a total power capacity of 40 MW, associated to the development of the forestry industry.

Promote, in close cooperation with the Ministry of Environment, the construction of 1 or 2 incineration units based on waste fuels in the main urban centers of the country, totaling 50 MW, and the establishment of incentives for preparing landfills to collect and value biogas energy.

Measures in the area of wind energy
Promote the construction of the Tombwa Wind Farm with an initial capacity of 20 MW and a 60kV connection to Namibe, taking advantage of existing and planned grid infrastructures to meet the consumption needs of the Southern System.

Complete the wind resource measurements at the 12 identified sites with potential for the construction of wind farms.

Promote the construction and operation of new wind farms across the territory with a total power capacity of 80 MW by 2025, giving preference to the link with universities and the launch of training courses in the area of renewable energies.

Ease the establishment of wind turbine maintenance systems and their respective spare equipment, to feed the domestic market.

Measures in the area of the remaining sources of energy and research and development
Promote the establishment of a Research Centre for Renewable Energies in close cooperation with the Ministry of Science and Technology.

Promote the establishment of protocols with national leading universities for research and development in the area of renewable energies, as well as for equipment certification.

STRATEGIC GOAL 3: Promote and accelerate public and private investments in new renewable energies

Framework and specific goals
In order to accelerate the investment in new renewable energies it is important to set clear rules in terms of regulation, incentives and favorable tax regimes for investment and also develop human skills regarding qualification and information.

Regarding regulation, it is important to establish appropriate procedures to private initiatives in the allocation of concessions, clear rules and deadlines defined in the access to the grid and in the licensing of projects, as well as clear and simple rules to entities acting at the level of rural electrification.

Regarding financing and incentive mechanisms, the establishment of subsidized tariffs for new renewable energies connected to the grid (“Feed in tariffs”) are an important component, therefore the establishment of tariffs should take into consideration the applicable tax system, the type of financing and respective interest rates and maturities, and the CDM - variables that must be optimized to the RE. In addition to the tariff, the developers should obtain a payment guarantee from the Ministry of Finance.

The National Electricity Fund (FUNEL) plays an important role in this strategy, particularly in supporting rural areas and in raising/channeling concessional financing and assistance. FUNEL, through INEL, will also keep cooperation with the Sovereign Fund that may be a minor shareholder of the projects to be developed.

Regarding skills training and communication, it is important to promote conditions for staff and skills training and increasing knowledge regarding the potential and benefits of renewable energies, particularly in rural areas.

SPECIFIC OBJECTIVES TO PROMOTE NEW RENEWABLE ENERGIES

The specific goals to promote investment in renewable energies by 2025 are:

• Approve specific laws for new renewable energies;

• Approve pre-defined subsidized tariffs (FiT) for renewable projects to be grid-connected of up to 10 MW and review the tax system;

• Allocate an amount of at least 1,000 million Kz per year to the National Electricity Fund (FUNEL) by 2025 to support rural electrification programs based on renewable energies and to the establishment of subsidized credit lines for the purchase of individual systems or launch of productive activities;
• Ensure the establishment of at least one training center for renewable energies;

• Launch a media campaign about renewable energies and its advantages, particularly as a means of bringing basic energy services to rural areas and boost solar thermal.

In order to implement the goals the following measures have been identified:

Measures in the area of regulation
Approve and publish specific legislation for attribution of concessions and licensing of RE projects, including procedures for the private sector, the allocation of power blocks - regardless of locations - for promotion of tenders with industrial counterparts, and a simplified and integrated regime for the attribution of joint concession for production and use of water resources for small hydropower plants of up to 10 MW.

Define, in the laws to be approved relative to RE, the principles and rules for grid connection and supply from the new renewable energies. Given its specificity, among other aspects, the rules should establish the principle of “receive or pay” and provide total priority in the hierarchy of dispatch to energy generated by RE.

Review of the environmental impact assessment legislation in order to establish a simplified procedure based on Environmental Incident Studies whenever renewable energy projects are developed outside protected natural areas and exemption of license and environmental impact assessment in the case of solar PV projects and mini-hydro of up to 10 MW. Adopt specific laws and regulations for the exercise of off-grid generation activity, considering the particularities of the technologies associated with the new renewable energies, as well as for the licensing of off-grid operators, either for generation and trade, or for the provision of energy and/or maintenance services, ensuring that technical standards are met, that the service quality is also met, that the licensing and monitoring of the activities are simple and eased, and that the activity is profitable, in terms of the licenses provided.

Measures in the area of financing and incentive mechanisms
Establish and promulgate subsidized tariffs for the supply of electrical energy to the grid based on new renewables of up to 10 MW. Accommodate, whenever possible, the regime of decreasing tariffs to ensure the sustainability and competitiveness of renewable energies in the future. For more than 10 MW, provide for a negotiated tariff regime based on Power Purchase Agreement (“PPA”).

Establish specific calculation rules or standards for specific situations in case of concessions for the supply of electricity in isolated systems based on renewable energies. For local grids prioritize subsidy investment and initial installation through pre-determined amounts per client connected and installed kW.

Establish the concession of sovereign guarantees during the initial 15 years of operation for all new renewable energy projects over 1 MW and ensure, through the Ministry of Finance, concessional financing for investments in approved renewable energy projects, which management and retrocession of their responsibilities will be guaranteed by the National Energy Fund.

Review fiscal policy applicable to new renewable energies, namely at the consumption tax level applicable to investments in renewable energies, to the purchase of individual solutions and systems and to power purchase in local grids, as well as at the level of the exemptions to be applied to the custom levels and industrial tax in the early years.

Establish appropriations, rules and management of the National Energy Fund (FUNEL) by the National Institute for Rural Electrification. The Fund should make provision for, among others:

• Obtaining and channeling concessional financing, guaranteed by the Angolan State, in favor of new renewable energy projects connected to the grid, assuming the retrocession of their responsibilities and channeling capital gains to financing rural electrification;
• A suitable engagement with the Angolan Sovereign Fund, which will seek to take minority share in large projects (greater than 10 MW) to support its financing and feasibility;
• The subsidy for the installation of “solar or renewable villages”;
• The support, through pre-established subsidies per customer and installed kW, to an initial investment in local networks, allocated by a tendering procedure;
• Support the distribution of improved stoves and solar flashlights, manufactured in Angola, or “renewable vouchers” for rural and dispersed areas in Angola;
• The promotion, along with local banks, of credit lines to purchase individual solar systems and to support entrepreneurship and the creation of businesses for distribution of solutions and energy stores;
• International cooperation in order to maximize the raising of non-refundable financing for rural electrification projects in Angola;
• The realization of the CDM procedures reverting its benefits for the financing of rural electrification.

Capacity building and communication measures
Promote, in conjunction with the Ministry of Education and the university system, the creation of RE training centers that contribute to the technical development of the country in the RE.

Promote and disseminate this strategy of RE development together with the financing institutions, at various levels in the country (through lectures, seminars and workshops) and internationally in active countries in renewable energy matters.

Promote and stimulate the RE market, through the diffusion of information related to the economic, environmental, social and commercial benefits of renewable energy technologies and its applications, in particular in rural areas. Launch the communication campaign and spread the knowledge of the technologies use and conversion of renewable resources, in particular through:

• Regular information and education programs in communities and schools;
• Bilingual brochures (in official and local languages) with the divulgation of RE;
• Information about RE on the website of the Ministry of Energy and Water.

Promote the communication and interaction between national, provincial and local governmental institutions in the RE policies. Empowering provincial institutions to serve as a link between communities and the central strategy and ensure that both are continuously aligned.